Glossary

D

discount rate
The minimum acceptable rate of return on an investment. It can also be described as the expected return for an investment of comparable risk. You can specify an annual discount rate to be used for calculating net present value and payback period for each portfolio planning cycle and scenario.

F

financial percentile
The percentile rank of the investment on the financial metric. To see the formula used to calculate the financial percentile, see financial percentile in the Formulas and Calculations appendix.
funding
In Oracle Project Portfolio Analysis, the process of allocating available funds to projects for the specified funding periods. The purpose of the funding process is to identify projects that can be executed using available funds. The funding process considers only the costs that will occur during the funding periods, and does not consider revenue amounts. Oracle Project Portfolio Analysis does not require that the funds allocated be within the baseline budget amount, and therefore does not do a funds check.
funding periods
The range of periods during which funds available and funds required are considered. The funding periods are configured on a planning cycle with the parameters Funding Period From and Funding Period To. For projects that run beyond the funding periods, only costs that are scheduled to occur within the funding periods are considered when calculating Funds Required.
funding variance
Net funds needed to spend for a specified duration. Funding variance represent the pool of money required minus available funds within the funding periods for a portfolio plan. The system recalculates funding variance for a scenario as well as for each investment class code in the scenario, based on the set of projects that have been recommended.Funding variance is a tool for scenario development. If the funding variance is a positive amount, funds are overspent (the approved projects require more funds than the amounts available). If the funding variance is negative, then there are available funds to spend.To see the calculation method for funding variance, see funding variance in the Formulas and Calculations Appendix.
funds allocated
A system-defined indicator that shows if there is money available from the pool to allocate to all projects in a scenario. Users can specify any metric as a parameter to rank the projects for allocations of funds. The value of funds allocated is determined by (1) ranking all approved projects, highest to lowest, by the metric specified, and then (2) performing funds allocation from the pool of money available by the funds required, in the order of the project ranking.
funds available
Funds available to spend for a specified duration for a portfolio plan. You enter funds available for the portfolio plan and the percentage of funds available for each investment class code. You can adjust and compare funds available for each scenario in the plan. The funds available value is used to calculate funds allocated.
funds required
Funds needed for a specified duration. The funds required figure represents the pool of money needed within the funding periods for a portfolio plan. The funds required value for a project is calculated as the sum of project costs scheduled in the funding periods. Funds required do not include costs outside the funding periods. The system calculates funds required for a scenario as well as for each investment class code in the scenario, based on the set of projects that have been recommended.

I

internal rate of return
The discount rate at which the present value of future revenues of a project, investment class code, or scenario is equal to the present value of future costs of the project, investment class code, or scenario. Note: The net present value of the project, investment class code, or scenario is zero when you use the internal rate of return as the discount rate.To see the calculation method for internal rate of return, see internal rate of return in the Formulas and Calculations Appendix.
investment class category
A class category used to analyze and balance the distribution of cost and benefit for a scenario among the class codes for that category. A project must have a class code value for the investment class category in order to be collected into a planning cycle. The aggregate net present value, return on investment, internal rate of return, and payback period are calculated for each investment class code.
investment class code
A class code defined in the investment class category.
investment index
The overall percentile rank of the project investment.To see the formula used to calculate the investment index, see investment index in the Formulas and Calculations appendix.
investment mix
The funds allocated to a project portfolio, shown by percentage allocated to each investment class code.

N

net present value
The present value of the future net cash flow of a project, investment class code, or scenario using the discount rate defined for the portfolio planning cycle. Net present value of a project is calculated by discounting all future revenues and costs for the project to the present time, and discounting their value based on the discount rate. Net present value for an investment class code or a scenario is calculated by discounting all future revenues and costs for all approved projects in the investment class code or scenario.To review the formulas used to calculate net present value for projects, investment class codes, and scenarios, refer to net present value in the Formulas and Calculations appendix.

P

payback period
The length of time it takes to recoup the initial amount invested, without regard to the time value of money. Payback period of a project, investment class code, or scenario is calculated as the number of months it takes to recoup total cost. Payback period of a project, investment class code, or scenario is calculated as the number of months it takes to recoup total cost.To review the formulas used to calculate payback period, refer to payback period in the Formulas and Calculations appendix.
percentile
The percentage of scores in a distribution that a specific score equals or exceeds. Percentile is always a number between 1 and 100. A percentile conveys the rank of a score, rather than its value. For example, if project A scores 88% on a strategic metrics, and 95% of the other projects score the same or lower, then project A's stratic percentile is 95 (project A scored in the 95th percentile).Oracle Project Portfolio Analysis uses the following percentile measures: financial percentile, strategic percentile, risk percentile, and investment index. You cannot roll up the percentiles of projects to the scenario level.
planned benefit
The estimated revenue amounts at the completion of a project. Planned benefit is defined at the project level and can be rolled up to the investment class and scenario levels for approved projects.
portfolio plan
A set of one or more scenarios for a portfolio. At the end of a planning cycle, a portfolio analyst chooses one or more scenarios to recommend and then submits the plan for approval. A portfolio approver chooses which scenario to approve and then approves the overall plan.
portfolio planning cycle
A series of activities to proactively examine active projects and new project proposals, with the aim of selecting projects to fund, based on an alignment with organizational strategic objectives and financial and resource constraints. A portfolio planning cycle begins when a portfolio analyst initiates the planning cycle, and ends when the plan is approved and closed.
portfolio selection classification
A class category that is selected by the implementation team to select projects into portfolios. The PJP: Portfolio Selection Class Category profile option is used to specify the portfolio selection classification.
project
A unit of work that requires resources to produce measurable results. A project can be broken down into one or more tasks. A project is the unit of work for which you specify revenue and billing methods, invoice formats, a managing organization and project manager, and bill rate schedules. You can charge costs to a project, and you can generate and maintain revenue, invoice, unbilled receivable, and unearned revenue information for a project.
project funding approval status
A system-defined, project-level status (distinct from project status). Project funding approval status represents the decision that was made about a project in the approved scenario in the most recently approved plan. The project funding approval statuses include: Proposed, Approved, On Hold, Rejected, and Null (funding not required).Users can manually change a project to Proposed or Null status on the project setup page. All other status changes are driven by plan approval actions.
project portfolio
A collection of projects that are grouped together to facilitate effective analysis, funding, and management. The projects can be related or independent of each other. The projects typically share the same strategic objectives and the same resources.

R

recommended funding approval status
A recommendation for the decision that is made about funding a project in a scenario.
return on investment (ROI)
An index used to evaluate projects for which net present values have been determined. The higher the number, the more financially attractive the projects are. Return on investment (ROI) of a project, investment class code, or scenario is determined by dividing the net present value of the project, investment class code or scenario by its total cost.To review the formula used to calculate return on investment, refer to return on investment in the Formulas and Calculations appendix.
risk percentile
The percentile rank of the investment on the risk metric.To see the formula used to calculate the risk percentile, see risk percentile in the Formulas Appendix.
risk score
The weighted strategic score measured against risk. You can define and nominate a group of strategic objectives to measure risk.

S

scenario
A set of projects considered for funding, typically modeled to examine a potential business scenario. A scenario is a planning instance for a portfolio planning cycle to support funding approval decisions. You can model multiple scenarios simultaneously during a portfolio planning cycle.
scenario project
A project that is being considered as part of a scenario. A scenario includes or excludes a project by adding or removing a scenario project. The same project can be included in multiple scenarios.
strategic percentile
The percentile rank of the investment on the strategic metric.To review the formula used to calculate the strategic percentile, see strategic percentile in the Formulas and Calculations appendix.
sunk cost
Investment of capital and efforts before a decision is made to undertake or continue a project. Both actual costs and committed costs of a project are included in sunk cost. The sum of costs that occur before the Funding Period From date are sunk cost. Sunk cost is included in total cost.To view how sunk costs are determined in Oracle Project Portfolio Analysis, refer to sunk cost in the Formulas and Calculations appendix.

T

total cost
In Oracle Project Portfolio Analysis, total cost is the sum of estimate to complete plus sunk cost. Total cost disregards any cost after the Effective Period To date.Total cost is defined at the project level and can be rolled up to the investment class code and scenario levels.Total cost of an investment class code or scenario is the sum of total cost for all projects whose recommended funding approval status is set to Approved.To view the formula used to calculate total cost, refer to total cost in the Formulas and Calculations appendix.

W

weighted strategic score
The score for a project, investment class code, or scenario when compared with a set of strategic groups. Weighted Strategic Score of a project is weighted by the percentages defined for the strategic objectives and groups during planning cycle setup. At the investment class code and scenario levels, the weighted strategic score is calculated as the average weighted score across all approved projects within the scenario or investment class code, weighted by the planned costs of those projects.To review the formulas used to calculate weighted strategic score, refer to weighted strategic score in the Formulas and Calculations appendix.